Unregulated financial, health or other markets will always attract snakes, chancers and charlatans, so be wary of false saviours. Peter Kelly explains…

There is a fascinating documentary on BBC iPlayer about the rise and fall of Sam Bankman-Fried. His story is like a modern-day Greek tragedy or a religious parable and it is a lesson for us all, particularly those of us who want to make the world a better place.

Bankman-Fried was a gifted mathematics student who wanted to change the world for the better. He decided he would do this by using his gift for numbers to make money on the markets and then he would give all the money away.

At one point, he was estimated to be worth £22 billion, making him the richest person on the planet under the age of 30. And he pledged to give most of the money away to good causes.

Bankman-Fried set up a hedge fund called Alameda Research in 2017 and FTX, a cryptocurrency exchange in 2019. FTX was hugely popular and successful. It was marketed in a spectacular way that brought cryptocurrency into the mainstream.

Tom Brady, the greatest quarterback of all time, did ads for them, as did my comedy hero Larry David. Bill Clinton and Tony Blair spoke at an event organised by FTX. Media attention and fascination in Bankman-Fried exploded. And then it all fell apart.

He is currently on trial in New York charged with fraud. For all the razzmatazz and dazzlement of modern technology and game-changing prowess of cryptocurrencies, Bankman-Fried is charged with good old-fashioned embezzlement. It is alleged he took customers’ money from his exchange and used it for his own personal use. It is claimed he took customers’ money to help fill a hole in his hedge funds’ spreadsheets.

What I found so interesting about the documentary is the sense that Bankman-Fried does not feel like he did anything wrong. He took money that did not belong to him and gambled that money and lost that money, wiping out others’ savings and investments, ruining lives and shattering dreams. In the documentary he says he did not want this to happen. And, of course, he didn’t.

He wanted to take customers’ money, invest it, make back the losses he had already made on his own investments and return the money before anyone would notice. His ‘intentions,’ if you like, were good but the outcome, which he had no control over, let him down. It is a fascinating case but also a story of human fallacy that is as old as the hills.

Some people could argue that Bankman-Fried has a messiah complex. He believes he was born for greatness and was destined to do so much good for the world that it did not matter if he broke a few rules and regulations along the way. Rules are for little people, not saviours.

And if the end result, as I am sure he dreamt it to be, was to make loads of money and give it away, and the money he misappropriated was returned before anyone noticed, then why not break a few rules?

FTX collapsed after a news report showed that Alameda Research had major liabilities and the line between the two companies seemed to blur. This led to a loss of confidence in FTX and a bank run. The bank run showed up the alleged fraud.

We live in a time where trust in government is low. This creates an appetite for new ideas and institutions. Cryptocurrencies are hyped up as the future, a currency free from government corruption, interference and regulations. All humans are fallible, nobody can be fully trusted. That is why we need rules, regulation and oversight.

Areas of commerce lacking regulations will always be a magnet for snakes, chancers and charlatans. People with the best of intentions can still ruin your life. The trial will be an interesting drama to watch unfold.

As a society, we should be always strive to improve and try solve our problems. New technologies are a powerful tool when used appropriately. Technology will always try and race ahead of rules and regulations because that is the area where God-like fortunes are made. You can call it the gold rush, the Wild West, and it will always exist as we will always produce the personalities and emotions to search for it and seek it and thus create it.

The emotion that drives cryptocurrencies is FOMO (fear of missing out). Ask any teenager who has missed out on a big social event and they will tell you what FOMO feels like. It is a very powerful emotion.

I would never judge anyone who is swayed by such powerful emotions but remember, unregulated financial, health or other markets will always attract snakes, chancers and charlatans, so be wary of false saviours.

Peter Kelly is a pharmacist based in London and a stand-up comedian.